Stocks at the Tehran Stock Exchange briefly ticked up in the week ending Oct. 8, compared to last week, although the current gloomy atmosphere still prevails in the equity market.
Although the equity market has been on a downward trend in the past 6 months -- which has slumped 9.2 percent compared to the same period last year -- the TSE benchmark rose 143 points or 0.2 percent to close a positive trading week at 71,873.7, with the major indices contributing to the uptick.
According to the TSE’s website, the first market index pulled higher 186 points or 0.36 percent to 52,687.4. The free floating index gained 144 points or 0.18 percent to 80,778.6. The industry index rose 94 points or 0.15 percents to 60,921.1. The blue chip index inched up 5 points or 0.14 percent to 3.286.7. The financial index was up 626 points or 0.49 percent to 60.921.1.
While most of the indices ended the week up from last week, the second market index tumbled 323 points or 0.16 percent, and stood in red.
The TSE failed to keep the trade volume and value gains and was down amid the cloudy economic forecast and the skittish mood of the investors. Based on the TSE report, the trading value reached 4.626 trillion rials, which indicates a 16.9 percent decline. In addition to that, trading volume was down 31.3 percent as more than 2.4 trillion shares changed hands at the market.
The overall outlook of the stock market in Iran is still grim as most shares hit the rock-bottom value – a trend which has caused a huge selloff in the past 6 months.
Some market analysts believe that the equity market’s companies would surge again in the long run, although these precautionary measures are crucial as they are expected to help investors to shore up their portfolios.
Protective motives would lead investors to make wise decisions, but it should be noted that the stock market has been hit hard by the western sanctions against Tehran’s nuclear program and the subsequent recession. The equity market won’t get back on track if the economy fails to recover from recession.
Despite some recent attempts aimed at tackling the capital market challenges, the market’s benchmark continues to bear the brunt of a downward sentiment. Although the shares have hit rock-bottom, it is not a solid implication that the traders should come back to the TSE, an official from the Securities and Exchange Organization said.
When it comes to investment in the exchanges, various factors should be taken into consideration including the volatilities that the major industries face in Iran and their sentiment in a global level.
Some analysts agree with the idea that as most of the shares hit the rock-bottom, they shouldn’t be considered undervalued, as their surge in 2013 was totally related to the currency collapse. That is why the traders are refraining from buying them at their current price. However as soon as tangible shifts happen at the capital market, including permanent suspension of the western sanctions, the nervous mood of investors is likely to lessen.
In the meantime, as transparency in the overall market becomes clearer, the stock market is more likely to shift to a positive trend; however such a drastic action may not happen in a short period of time.
